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Bank locally

Submitted by on 1, October 9, 2008 – 11:45 amNo Comment

Did anybody notice the ads in the Journal and the Sun last week touting the safety and security of deposits in our local Bank of Alameda? Turns out they’re part of a massive campaign aimed at calming jangled nerves amid the spectacular failure of several major financial institutions in recent months and a wealth of other frightening financial news.

“When you read the news, there’s a lot of hysteria out there. But probably 95 (percent), 98 percent of banks are very safe,” said Stephen G. Andrews, the Bank of Alameda president and star of the ads.

Andrews said community banks – of which there are 8,000 in the U.S. – didn’t invest in “exotic securities” like unsecured mortgage debt, which have been blamed for much of the trouble on Wall Street. Instead, their money is in government securities, which aren’t taking as big of a hit. And they don’t do as much investing as the big guys.

As a bank that focuses on business and real estate, his bank has few home loans (no subprime). What it does a lot of is construction and commercial real estate lending along the 880 corridor. Andrews admits there are “pressures,” like condominiums being auctioned in Oakland. But for the most part, he said, “the immediate Bay Area has held up pretty well.”

So far, according to a press release listing their financial information in the quarter ending June 30, so good, apparently: Less than 2 percent of the bank’s loans are “non-performing,” and they’ve got $1.5 million in foreclosed real estate (which is like two or three homes). The bank has been escalating its loan reserves exponentially to cover lapsed loans present and future. As far as regulators are concerned, they have the cash to cover any problems that may arise on the loan side.

Provisions that community bankers got into the bailout bill that passed last week probably won’t hurt, either: FDIC-insured limits on deposits are up to $250,000 through the end of next year, and community banks will have access to a government program allowing them to sell troubled mortgage assets.

If you want a pretty reader-friendly explanation on the bank’s performance, check out www.bankrate.com. Some financial information is available on the bank’s website too.

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